California Approaches "Fiscal Meltdown"; Schwarzenegger Declares Fiscal Emergency; Fort Worth Texas Ponders Scrapping Defined Benefit Pension Plans
At long last a major city in the US (Fort Worth has a population in excess of 600,000) is considering doing what desperately needs to be done: killing defined benefit pension plans for public workers.
Instead, the union suggests "an additional 6 percent of payroll to the pension, which would fix the shortfall in a few years". Where would that contribution come from? Taxpayers of course. Will it fix the system? No, it will not fix the shortfall because of insane pension plan assumptions.
The only solution is to kill these plans right here, right now. Unfortunately, such action will not fix the problem of unfunded plans for current vested employees, but it is a major step in preventing further buildup of a fiscally insane proposition.
If unions had any common sense they would embrace, not fight these decisions. The reason of course is the only other solution for cities would be to resolve these difficulties by declaring bankruptcy, putting accrued benefits at risk.
Mike "Mish" Shedlock